OCR tipped to rise by June
New Zealand inflation was probably unchanged in the fourth quarter, reflecting a drop in food prices, which may help convince the Reserve Bank to hold off on raising interest rates until April.
The Consumer Price Index held steady from the third quarter, when prices jumped a higher-than-expected 1.3 per cent, according to the median estimate in a Reuters survey of 13 economists.
Forecasts ranged from -0.3 per cent to +0.3 per cent. The inflation rate may have gained 2.1 per cent from the same quarter of 2008, within the RBNZ's 1 per cent to 3 per cent target range. The data is released on January 20.
Fourth-quarter CPI will be a key indicator for Reserve Bank Governor Alan Bollard, who last month predicted a decline of 0.2 per cent while flagging concern that the recession hadn't dented inflation as much as expected.
Bollard has tipped a mid-year increase in the official cash rate from its current record low 2.5 per cent but the market is anticipating he will start as soon as March and have hiked the OCR by 75 basis points by June 30.
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